Quebecor saw opportunity to expand footprint when Rogers-Shaw deal was announced

OTTAWA — Quebecor Inc. saw an opportunity for Videotron Ltd. to expand its footprint nationally when Rogers Communications Inc.'s $26-billion proposed takeover of Shaw Communications Inc. was announced in March 2021.

In cross examination during the hearing on the deal Monday, Quebecor CEO Pierre Karl Péladeau confirmed that his company, which owns Videotron, viewed the proposed merger as a chance to potentially enter the wireless market in Western Canada.

Before cross examination began, Péladeau emphasized Videotron's long-term interest in becoming a national wireless player, adding that if Videotron succeeds in buying Shaw-owned Freedom Mobile, it could achieve that.

He also delved into Videotron's success in Quebec and how it has differentiated itself from competitors over the years with a focus on lowering wireless prices in the province, creating a strong product and enhancing its customer service.

Videotron acquired 3500 MHz spectrum in the summer of 2021, concentrated in southern and eastern Ontario, Manitoba, Alberta and British Columbia.

Quebecor agreed to buy Freedom in a $2.85 billion deal earlier this year.

The proposed sale of Freedom to Videotron is part of Rogers' strategy to get its broader deal across the finish line.

The sale of Freedom Mobile to Videotron would see Quebecor buy all of Freedom's branded wireless and internet customers as well as all of Freedom’s infrastructure, spectrum and retail locations.

In late October, Industry Minister François-Philippe Champagne put new conditions on the Rogers-Shaw deal, specifically targeting the proposed sale of Freedom to Videotron.

Champagne -- who as minister of innovation, science and industry must approve any spectrum licence transfer -- left the door open to a revised agreement, saying he had two major stipulations.

He said Videotron would have to agree to keep Freedom's wireless licences for at least 10 years.

He also said he would "expect to see" wireless prices in Ontario and Western Canada lowered by about 20 per cent, putting them in line with Videotron's current Quebec offerings.

In response, Quebecor said it would accept the conditions, agreeing to incorporate them in a revised deal.

The hearing before the Competition Tribunal is expected to last until mid-December and aims to resolve the impasse between the Commissioner of Competition, who wants to block the deal, and Rogers and Shaw.

The Competition Bureau is one of three regulatory agencies that must approve the deal, in addition to the CRTC and Innovation, Science and Economic Development Canada.

Rogers wants to close the Shaw deal by the end of the year, with a possible further extension to Jan. 31, 2023.

This report by The Canadian Press was first published Nov.21, 2022.

Companies in this story: (TSX:RCI.B, TSX:SJR.B, TSX:QBR.B)

The Canadian Press